The market for hospice and geriatric care in Chicago presents a significant opportunity for practice owners considering their next chapter. As an owner, you are positioned in a rapidly growing field, yet navigating a sale involves unique challenges, from state regulations to shifting buyer preferences. This guide provides a clear overview of the market, the sale process, and how you can strategically prepare your practice to achieve its maximum value upon exit.
Curious about what your practice might be worth in today’s market?
Market Overview: A Time of Growth and Change
The decision to sell your practice occurs within a larger market context. For hospice and geriatric care, that context is overwhelmingly positive, driven by powerful demographic and economic trends. Understanding these forces is the first step in positioning your practice for a successful sale.
A Growing and Shifting Landscape
Nationally, the hospice market is expanding at a remarkable rate, with a projected compound annual growth rate of 8.36% through 2030. This growth is attracting new buyers. We see a clear trend of ownership shifting from non-profit to for-profit entities, meaning more sophisticated, investment-backed groups are looking to acquire established practices like yours. These buyers are drawn to the stable, Medicare-backed revenue streams inherent in hospice care.
The Chicago-Area Opportunity
Locally, the Chicago market is robust. In Illinois, 51.9% of Medicare decedents utilize hospice care, indicating strong community acceptance and established referral pathways. For owners, a key growth opportunity lies in expanding services into assisted living and nursing facility settings. Buyers are actively seeking practices that either have a foothold in these areas or have the potential to grow there, making it a valuable asset to highlight.
Timing your practice sale correctly can be the difference between average and premium valuations.
Key Considerations for Chicago Sellers
Beyond the promising market trends, a buyer will look closely at the specific operational strengths of your practice. Your readiness in these areas will directly impact your valuation and the smoothness of the transaction. A buyer isn’t just acquiring your revenue stream. They are acquiring your reputation and your operational platform. This means your compliance with Illinois Department of Public Health (IDPH) licensing and your Medicare certification status are foundational. Being fully accredited and “ready to bill” is a major value driver. Furthermore, in an industry where quality of care is under scrutiny, a documented history of positive patient outcomes, strong community ties, and an experienced, stable interdisciplinary team become powerful differentiators.
Every practice sale has unique considerations that require personalized guidance.
3 Trends in Chicago’s Hospice M&A Market
Recent activity in the Chicago market reveals a few key trends that you should be aware of as you consider a sale.
- A Market Poised for a Rebound. After a slower period in 2023 due to interest rate hikes, activity is beginning to pick up. As economic conditions stabilize, buyers who were on the sidelines are re-engaging. This creates a potential window of opportunity for well-prepared practices to attract premium attention before the market becomes saturated.
- The Accreditation Premium is Real. Market data shows a vast difference in value between practices. A fully accredited Chicago-area hospice with established revenue can command valuations well over $1.5 million. In contrast, startups without a track record or full certification sell for a fraction of that. Your licenses and billing relationships are among your most valuable assets.
- Strategic Buyers are Seeking Scale. The shift toward for-profit ownership means buyers are often platforms looking to build density in key urban markets like Chicago. They are looking for established, reputable practices that can serve as a foundation for further growth, and they are willing to pay for that strategic fit.
The window of opportunity for optimal valuations shifts with market conditions.
The Sale Process: A Guided Journey
Selling your practice isn’t a single event. It is a structured journey with distinct phases. The process typically begins long before your practice is shown to any buyer, starting with deep preparation and a comprehensive valuation to understand your true market worth. From there, we build a confidential marketing strategy to approach a vetted list of qualified buyers, creating a competitive environment. Once interest is established, the process moves to negotiating offers and letters of intent. The most intensive phase is often due diligence, where the buyer inspects every aspect of your financials and operations. This is where many deals fail, but with proper preparation, it can be a smooth validation of your practice9s quality before proceeding to the final legal agreements and closing.
Preparing properly for buyer due diligence can prevent unexpected issues.
How Your Hospice Practice is Valued
A professional valuation is the foundation of any successful sale. While many owners think of value as a percentage of revenue, sophisticated buyers look at your practice’s profitability. The core formula is your practice9s Adjusted EBITDA multiplied by a specific Valuation Multiple. Adjusted EBITDA is a crucial figure; it represents your true cash flow after adding back personal expenses or one-time costs. The multiple is not a fixed number. It changes based on the quality and risk profile of your practice.
Below are some of the key factors that influence your valuation multiple.
| Factor | Lower Multiple | Higher Multiple |
|---|---|---|
| Scale | Under $500K in EBITDA | Over $1M in EBITDA |
| Provider Reliance | Dependent on owner | Associate-driven model |
| Referral Sources | Concentrated in a few sources | Diverse referral network |
| Growth Profile | Stable, limited growth | Clear avenues for expansion |
| Compliance | Basic compliance | Documented, best-in-class |
Understanding and improving these factors before a sale is one of the most effective ways to increase your final proceeds.
A comprehensive valuation is the foundation of a successful practice transition strategy.
Planning for Life After the Sale
The moment a deal closes is not the end of the story. It is the beginning of a new chapter for you, your staff, and your patients. Planning for this transition is as important as negotiating the price. You should consider how the structure of your sale will impact your after-tax proceeds, a detail that can make a massive difference in your net outcome. You may also negotiate an ongoing role through an earnout or by rolling a portion of your equity into the new, larger company. This can provide a second, often larger, financial return down the road. Most importantly, a well-planned transition ensures your staff is cared for and your legacy of quality patient care continues, providing peace of mind that what you’ve built will thrive under new ownership.
Your legacy and staff deserve protection during the transition to new ownership.
Frequently Asked Questions
What are the key market trends affecting the sale of hospice & geriatric practices in Chicago?
The market is rapidly growing with a projected national hospice market growth rate of 8.36% through 2030. Ownership is shifting from non-profit to for-profit entities, attracting investment-backed buyers. Locally, in Chicago, strong community acceptance and referral pathways exist, with a focus on expansion into assisted living and nursing facilities.
How does licensing and accreditation impact the value of a hospice practice in Chicago?
Licensing and accreditation, especially compliance with Illinois Department of Public Health (IDPH) licensing and Medicare certification status, are foundational to value. Fully accredited practices ready to bill can command valuations well over $1.5 million, whereas startups without full certification sell for much less. These credentials are among the most valuable assets in a sale.
What should I expect during the sale process of my hospice & geriatric practice?
The sale process is a structured journey, starting with preparation and valuation, followed by confidential marketing to qualified buyers. After offers and letters of intent are negotiated, due diligence occurs where buyers inspect financials and operations. Proper preparation can prevent issues and ensure a smooth transition to final legal agreements and closing.
How is the valuation of a hospice and geriatric practice determined?
Valuation is based on the practice’s Adjusted EBITDA multiplied by a valuation multiple. Factors influencing the multiple include scale (EBITDA size), provider reliance (owner-dependent vs associate-driven), referral source diversity, growth potential, and compliance quality. Improving these factors before sale can significantly increase the sale price.
What should I consider for life after selling my hospice & geriatric practice?
Planning post-sale is essential for maximizing proceeds and ensuring smooth transitions. Consider tax implications to optimize after-tax proceeds. You might negotiate ongoing roles or equity earnouts to benefit from future growth. Ensuring staff care and legacy protection is crucial for maintaining quality patient care under new ownership.